Home Business Setup in Australia

Business Types

Sole Trader

This is the simplest form of business trading. A sole trader operates alone, and you would just register an ABN under you tax file number. More on registering an ABN later.. You don't have to register a business name, you may just want to trade as your personal name. It all depends on the type of business you want to carry out. Legally there is no difference between the individual and the business. For taxation purposes your income and expenses of running the business are incorporated into a business schedule in you personal income tax return.

Partnership

This is when two or more people carry on business together and the profits are shared. There has to be either a formal or informal agreement made betweent he partners. It is advised to create a formal partnership agreement, so as all the major details relating to the partnership are agreed and recorded in writing.

You must register with the ATO as a Partnership and you will be given a Partnership Tax File Number. You must also lodge a seperate Partnership Tax Return. The profit or loss is then transferred to the idividual partners Income Tax Return as Assessable income. Ideal for Husband and Wives that wish to split income.

Please note that the ATO can challenge the validity of a partnership. ie when partnerships are setup for income splitting purposes. The ATO can apply tax as though it was a sole trader.

Company

There are different types of Company Business Structures. For this purpose we will just look at the most common for small business which is a PTY LTD Company Structure. If you wish to setup a Company structure you are best to do this through an Accountant and they will look after all the business setup for you. There is also other companies that can help you with this such as Shelf Companies Australia. Companies are subject to the Corporations Law as well as Common Law.

A Company is a seperate legal entity from the people who found the company and from those who own the company. A Company can enter into contracts in it's own right and can own property.

All Companies are required to lodge an annual return with ASIC on an Annual Basis. Any changes must be reported such as change in Directors.

You can also setup a trust, which we will cover later.

Business Name Registration

Follow this link to our Business Name Registration page and we will direct you to the organisation in your state which handles business names registrations

Taxation Setup in Australia

Follow this link to our Taxation Setup in Australia page for all the information on registering for ABN Numbers, GST, and other taxation issues.

For information on the GST, visit GST Essentials

Developing a Business Plan

Please go to the following article which will help with your Business Plan development: